You are really wanting to retire in 40 years (from today). Your family history suggests that you’ll live a long life, and likely to live 30 years in retirement. You think that to live a reasonable lifestyle during retirement you’ll need about $15,000 per month (with first payment received 1 month into retirement).

Currently, you have $50,000 in retirement savings. Over the next 40 years, as you grow your career and earnings, you plan to save/invest the following: Yrs 1-10: $500/mo; Yrs 11-20: $750/mo; Yrs 21-30: $1000/mo; Yrs 31-40: $2000/mo. You’ll start this plan 1 month from now. Looking at interest rates, you think you can reasonably earn 7% per year, compounded monthly during the years before retirement, but a more modest 3% per year, compounded monthly during retirement.

A. How much do you need at retirement to live the way you want to?

B. Assuming you can earn the same 7% pre-retirement rate, how much additional would you need to save every month (starting 1 month from now), over and above what you already plan to save, over the next 40 years, to achieve your retirement objective?